The web search corporate disclosed in its 2006 annual report that the US
watchdog had called into question how it accounted for income taxes.

In its annual 10K securities filing, Google said it had received an initial
letter from the SEC on 16 March 2006 detailing various bones of contention. The
corporate subsequently began negotiations with the regulator, but the tax
dispute remains unresolved.

‘We believe that we properly account for our income taxes. We will continue
to work to resolve these comments with the SEC,’ Google said in the annual
filing.

It also warned in the annual report that a growing number of legislative
proposals for consumer data protection in the US and other countries could hurt
its business if enacted.